The Swiss bank UBS is holding last-ditch talks with the US government in the hope of avoiding disclosing the personal details of 52,000 American account holders in a high-stakes dispute which has opened up a serious diplomatic rift by threatening Switzerland's age-old tradition of bank secrecy.

In a request attacked as a "fishing expedition" by bankers, the US internal revenue service has demanded that UBS hand over the names of Americans with assets of $14.8bn lodged in Swiss bank accounts, on the grounds that the firm has been helping customers to dodge paying their fair share of US tax.

A hearing on the bust-up was due to begin today at a federal court in Miami. But at the 11th hour, UBS and the US authorities filed a joint petition to the judge asking for a stay pending out-of-court discussions.

The case puts UBS in an awkward position. The Swiss government has told the bank it would be illegal under Swiss law to reveal clients' personal details. But if UBS fails to comply with a court order in the US, it risks the re-opening of a criminal probe into its activities, which was settled in February, and ultimately the bank's ability to operate in America could be jeopardised.

Scores of other international banks are watching nervously as events unfold. Many feel the US is over-reaching its jurisdiction by asking a foreign bank for details of accounts domiciled overseas.

"This is an attempt to export US domestic law and impose obligations on a foreign bank in its home country," said James Nason, a spokesman for the Swiss Bankers Association in Basel. "The Americans can't just throw a telephone book at Switzerland and ask, 'do any of these people have Swiss bank accounts?'."

The US government has had UBS in its sights for some time. In February, the bank was obliged to pay $780m to settle criminal charges of aiding and abetting tax evasion in a smaller-scale case that culminated in UBS handing over details of about 250 clients. At the time, former UBS employee Bradley Birkenfeld made a series of lurid allegations about the bank's ethics - including a claim that he smuggled diamonds hidden in a toothpaste tube across an international border on behalf of a UBS client.

Long renowned for the discretion of its banking institutions, Switzerland is loath to permit any chink in its armour of secrecy. But experts say times have changed - while foreign clients once had to fly to Switzerland to open or access bank accounts, the country's banks now have branches around the world that actively seek deposits on foreign soil.

"What's been happening here is a pretty significant game of chicken," said Evan Stewart, a specialist in white collar litigation at Washington law firm Zuckerman Spaeder. "This is a slippery slope. If this goes, US citizens' ability to be secretive about their accounts elsewhere in the world is going to be troublesome."

In a statement, UBS would only say that it welcomes a hiatus for negotiations: "It is a positive development that the governments will now engage in intensive discussions over the next two weeks and attempt to negotiate a resolution of the John Doe summons litigation."